Businesss and consumers diverge over Hunter economy

Friday, 4 August, 2017

The gap between business and consumer confidence in the Hunter economy has widened in the June quarter. There is a sustained recovery in regional business conditions, but consumer spending remains subdued, in the Hunter and nationally.

HRF Centre lead economist Dr Anthea Bill says thatthe majority of Hunter businesses surveyed reported satisfactory or better profitabilityin the quarter to June of this year. Improved trading levels, and capacity utilisation above the long-term average, offered further evidence of a sustained recovery in business sentiment and performance. These trends have continued to improve since the downturn at the end of the mining investment boom.

“In contrast, consumer spending, in the Hunter and nationally, has not recovered from the substantial drop following the Global Financial Crisis,” Dr Bill stated. ”Among consumers, the region’s pessimists now slightly outnumber optimists in short-term expectations for the regional economy.”

This local result is consistent with national data, where lacklustre consumer spending is seen to be constraining growth. There has been historically low wage growth, record levels of household debt, and a continued drain on household savings. Housing approvals in the Hunter have declined during the June quarter, and there was a drop in house prices.

“The HRF Centre will closely watch the sentiment levels locally. We want to see if business success and growth in full-time jobs in the Hunter boosts consumer optimism,” Dr Bill said.

Analysis of the economic results was released at the Hunter Economic breakfast at Wests City on Friday 4 August. The breakfast also featured new research on youth employment and an expert panel discussion presenting a Hunter perspective on this important issue.